VAT Archives - Page 7 of 8

News,May 2018

What is Value Added Tax (VAT) and How Does VAT Work?

George05/11/2021Personal Tax , Taxation , VAT

VAT can be complicated, especially for the one who has just started out. Newcomers face a lot of difficulties to understand financial technicalities and jargon. Among those complex terms, the VAT is the one. Many business owners come across this term a lot while purchasing goods and services as private individuals from businesses. But only some of them are familiar with what actually is VAT, how does VAT work and how to charge and claim VAT. Let’s find out all in this short blog. Want to register for VAT? Fill out this form and leave the rest to us! What is Value Added Tax (VAT)? It is a general consumption tax that consumers need to pay for almost all goods and services in the UK. In simple words, it is an additional amount on most purchases for consumers. Any business operating within the UK with an annual turnover over the VAT threshold (£85,000 in 2021/22) is required to register for VAT and need to submit a VAT return. However, businesses below this threshold can voluntarily register for it. This is an indirect tax collected by the businesses on the government’s behalf. As they add VAT on all their goods and services, then they send the VAT paid to HMRC. They charge this tax on the items and services they sell to their customers and pay VAT on goods and services they buy from other businesses. All VAT-registered businesses need to keep records of the VAT charged and paid to others. How Does VAT Work? VAT is levied on most of the goods and services. Businesses that are VAT registered save a lot of money by charging VAT on the goods and services they sell and pay VAT on the things and services they use. Instead of sending VAT charged on every single transaction, businesses submit a VAT return to HMRC showing the total VAT they collected and paid in a tax quarter or year (as per the scheme). The VAT paid by a business to its suppliers is known as input tax and the VAT collected from other businesses is known as output tax. The amount of money you need to pay to HMRC will depend upon the difference of VAT you paid and charged. In case, if you collected more VAT from your customers than the VAT you paid, you need to pay the surplus to HMRC. On the other side, if you pay more VAT to your suppliers than you receive from your customers, you can request HMRC to reclaim the additional amount. Need help a VAT Accountant to Reclaim VAT, Contact CruseBurke! Current VAT Rates You need to be aware of the current VAT rates you pay and collect to reclaim the VAT on products you buy for your business. There are currently three VAT rates depending on the goods and supplies you deal with. These are: Standard VAT Rate (20%) A standard VAT rate of 20% is applied on most goods and services that fall under the category of luxury items like ice cream and sweets etc. Note: Due to Covid, you need to pay temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions (Currently it is 12.5% from 1 October 2021 to 31 March 2022). For more details click here. Getting professional advice from a VAT accountant is preferable to get your VAT refunds and to be saved from hefty tax implications that can wipe out your profit. So get in touch with our experts to be on the safe side. Reduced Rate VAT (5%) This rate applies to some specific goods. It is charged at the rate of 5% on goods like domestic fuel and power, etc. Zero Rated VAT (0%) Goods that are considered essential are charged a 0% VAT rate. It includes: Basic Food items Newspaper Books and newspapers Clothes of children The goods supplied to non-EU counties and VAT-registered EU businesses would also be charged a zero-rated VAT. You need to keep records of it and report them on your VAT return. Exempt Items There are some goods and services that are totally exempt from VAT like: training and education insurance, medical, finance, credit selling, leasing and letting of commercial land or buildings subscriptions fees to membership organisations fundraising events ( managed by charitable organisations) How We can Help? So you are now well aware of what is VAT and how does VAT work. Remember that this blog just serves as a basic guide for you. We have not discussed the complex VAT issues here. Our team of VAT experts are there for your assistance with anything complicated. From VAT registration, submission of VAT returns, consultation to complex issues like assessments, cross borders transactions, our VAT experts will help you with everything. For further queries on VAT, reach out to our accountants for expert advice. Get in touch today! Disclaimer: This blog provides general information on how does vat work.

How to Find a VAT Number?

George30/10/2021Business , Limited Company , VAT

A unique VAT (value-added tax) number is assigned to each VAT-registered business. If you’re a VAT-registered company, you’ll need the VAT number of other companies (suppliers) in order to reclaim any VAT you’ve paid. Therefore, this blog will let you know what is a VAT registration number, why it is essential and how can you find VAT numbers. Let’s start! Want to register for VAT? We’ll take care of everything to acquire your VAT number. So, fill out this form and leave the rest on us! What is a VAT Registration Number? When a company registers for VAT, at that time HM Revenue & Customs provides a unique ID to that company, which is called a VAT registration number. Within the united kingdom, the length of a VAT number is nine digits with the prefix GB. In case you are working with a supplier in another European country, then the format of the VAT number of that country will be different, with its own particular country code. Why is this Number Important? If you try to reclaim Value Added Tax from HMRC using an invalid VAT code from your supplier, then they will certainly reject your claim. In this case, you will either have to pay for it or spend time rectifying the situation. How and Where you Can Find VAT Numbers? You’ll receive a certificate confirming your VAT registration number after registering for VAT with HMRC. This number will be used for all of your company’s future transactions. Therefore, you have to keep it safe. You can also get the certificate using your HM Revenue & Customs business account. Examining the invoices that are provided to you by another business is the first step in obtaining another business’s VAT number. If the company you’re dealing with is VAT registered, then its VAT ID can be easily found on its invoices. If, on the other hand, you have paid VAT to a supplier but do not have a VAT number, you should contact them immediately. Because you’ll need a valid VAT ID to reclaim any VAT you’ve paid. Are you looking for a VAT accountant that will take care of everything on your behalf? Then, look no other than us for a low-cost service! How to Check a VAT Number is Valid? The following are the ways to check it is valid: 1) Calling the VAT helpline of HMRC In case you have any doubt about a VAT registration number, you can call HMRC. As it has a complete database for VAT-registered companies. 2) Checking the VIES Website Since the UK has left the EU, UK VAT numbers are no longer checked via the EU’s VIES system.To check a UK VAT number, use the HMRC VAT number checker instead:For EU suppliers, you can still use the VIES system: Conclusion Now that you know how to find VAT number, we will conclude our blog by saying that in order to reclaim the VAT you pay, you’ll need an accurate VAT number. You won’t be able to receive a refund from HMRC if you use an inaccurate VAT number in your return. So, we recommend consulting a professional for this as it is a complex business affair. CruseBurke offers inclusive VAT services at a reasonable price! VAT returns can be time-consuming and complex to file. So, you’ll need the help of VAT accountants to handle and submit your taxes; contact us for assistance! Disclaimer: This post is intended to provide general information on how to find VAT number.

Limited Cost Trader – Basic Guide for Small Businesses

George06/09/2021Business , VAT

The VAT FRS ( Flat Rate Scheme) was created to make it easier for companies to account for Value Added Tax and to minimise the service charges of meeting all the VAT laws. It is open for businesses with a turnover not above £150,000 in the following 12 months. To distinguish a business required to pay a higher rate of VAT on the FRS is known as limited cost trader. If the company meets the given conditions (by HMRC) of a LCT, then the company will be required to pay a 16.5% flat rate. Let’s explore more about LCT. Don’t have time to operate your company’s finances? Then, put your mind at ease and trust CruseBurke to take care of your company’s finances. Do you have a question? Please feel free to contact us right away! Who Qualifies as a Limited Cost Trader? According to HM Revenue & Customs, a LCT is a company that purchases only a few items. The company will need to pay a 16.5% flat rate if it meets the following conditions: The cost of purchasing items (including VAT) is below 2% of your annual turnover The cost of purchasing items (including VAT) is above 2% but below £1000 (per year) of your yearly turnover. You can not find the correct VAT flat rate for your company if your business does not meet these conditions. What are the Responsibilities of a Limited Cost Trader? As a LCT, you are required to check how much money you have spent on purchasing the items each quarter and see how this figure meets the conditions mentioned above. Moreover, you’ll have to utilise the (16.5%) LCT rate to your (VAT-inclusive) deals for that quarter to calculate how much is required to be paid to HM Revenue & Customs. Remember that do not use the regular rate. Contact CruseBurke’s skilled accountants if you require assistance from an accountant or tax specialist. Relevant and Irrelevant Items – Limited Cost Trader First, you need to calculate your annual inclusive amount of purchased items to see whether you meet the conditions of a LCT. All the items that are purchased for business purposes are included except: Capital costs – any items purchased to be utilised throughout an extremely long time, like a PC. Food and refreshments bought for the business or representatives. Anything linked with vehicles such as fuel, vehicle acquisition, parts, and so on except if your business is a taxi company (a transport service) You are an LCT if the annual inclusive amount of all the purchased items except for the ones mentioned above is below 2% or less than £1000. Conclusion We hope with the highlighted details; you understand the concept of limited cost trader better! It is essential for the businesses using the Flat Rate Scheme to check whether they are using the correct flat rate % for each fiscal year. It may be more beneficial for some company’s clients to take off the FRS and account for VAT utilising the general rules. Are you looking for an accountant to manage your business finances? We are a team of professionals that provide incredible accounting and taxation services at affordable prices! Disclaimer: This blog contains general information about limited cost traders.

How Much is VAT in the UK?

George26/08/2021Tax Issues , VAT

After Brexit, the UK VAT system experienced significant updates, especially from 2021 onwards. Though the major reforms have settled, it’s still essential to understand how much VAT you must pay in 2025, what VAT rules apply, and how it affects your business or purchases. Need professional advice from a VAT accountant? Get in touch with our experts today! How Much is VAT? Let’s see how much VAT you need to pay in the UK in 2025-26. Three different VAT rates are charged on various types of goods and services in the UK. Standard Rate (20%) Currently, the standard VAT rate of 20% is levied on most goods and services. This rate is also applicable to those goods that are below the standard distance selling EU VAT threshold sent from Northern Ireland to a non-VAT registered EU client. Reduced Rate (5%) A reduced rate VAT is 5%. Some of the goods and services are charged at a reduced rate, like: Home energy Children’s car seats Mobility aids for seniors Zero Rate (0%) As evident by the name, it means that it is charged at a 0% rate. It means that your customers will pay you 0% in VAT. However, still, you need to record and report it in your VAT returns. Some of the common examples of zero-rated goods are: Basic food items Books & newspapers Children’s clothing Most goods sent from Great Britain to countries outside the UK Most goods sent from Northern Ireland to countries outside the UK and EU Along with these rates, there are some goods and services on which you don’t need to pay VAT means they are exempt from VAT. Postage stamps, financial and property transactions are common examples of it. However, you don’t need to include it in your taxable turnover. You need to bear in mind that the VAT rates keep on changing, so you must be up to date with the VAT changes. Want to register for VAT? Today Register For Vat without any hassle, at CruseBurke. VAT Reforms Post-Brexit (Still Applicable in 2025) Though no major VAT reforms have been introduced recently, the post-Brexit VAT changes from 2021 remain in effect: The £15 VAT exemption for imported low-value goods is no longer valid. Sales under £135 to UK customers from overseas are now taxed at the point of sale, not at customs. Online marketplaces (like Amazon and eBay) are responsible for collecting VAT on behalf of overseas sellers for goods sold to UK customers under £135. These changes aimed to simplify VAT collection on imports and reduce fraud, while also leveling the playing field for UK businesses. Do You Need to Charge VAT on Exports to the EU? If you’re selling goods to EU customers and you’re a VAT registered business, the good news is that you can sell your goods at a zero rate. From 2025 onwards, the goods you send to EU member states will be treated equally as the goods that come from a non-EU country. However, import taxes are payable on them. As goods, services of the UK supplier will be considered same as the supplier outside the EU. Summing Up To sum up, you have understood the VAT changes and reforms that have recently been made. In addition, to find out the answer to ‘ how much is VAT payable in the UK’ you need to look at various factors like the business platform, size, nature and the location of your customers, etc. VAT can be a complex area for many, therefore it’s better to get in touch with a tax expert for help. So, look no further other than CruseBurke! Contact our qualified VAT accountants and sort out your issues! Get an instant quote right away! Disclaimer: This blog post provides general information on VAT.

Is Client Entertainment Tax Deductible?

George24/08/2021Personal Tax , Tax Issues , VAT

One of the most important marketing tactics that many businesses use is business entertainment, especially for retaining new clients and customers. Spending cost on business entertainment matters a lot when you want to build a network and attract new clients. So, if you’ve decided to allocate a marketing budget for entertaining clients and customers, you may think that whether the client entertainment is tax-deductible or not. Read on to find out the answer! Getting professional advice from a VAT accountant is preferable to reclaim VAT and to be saved from hefty tax implications that can wipe out your profit. So get in touch with our experts to be on the safe side! What is Entertainment as per HMRC? Entertainment is anything done for hospitality. Here is a list of common examples of entertainment: Offering food and drink Providing accommodation Provision of concert tickets and theatre Entry to sports events and clubs Use of capital assets for entertainment purposes Is Client Entertainment Tax Deductible? The simple answer to this question is ‘no’. As you can normally recover input tax, you paid on goods or services exclusively for business purposes. Generally, the cost incurred on entertainment for clients or customers is not considered business entertainment. For this reason, it is not tax-deductible and VAT cannot be recovered from it. However, still, there are few instances where a person can reclaim VAT, but the rules are complex and troublesome. For instance, if there is an entertainment party where you have invited your staff or employees, input tax on the cost spent on employees can be reclaimed. But still, reclaiming VAT on it is not that simple. If the employees acted as the host at the party, then the cost incurred on employees cannot be reclaimed. Say Bye to your financial worries with CruseBurke! Contact today! Is Client Entertainment an Allowable Deduction for Corporation Tax? According to HMRC, client entertainment is not an allowable deduction for corporation tax purposes. Hence, you need to pay for the cost of entertainment like the cost spent on a dinner for a client from the bank account of the business. In this stance, you need to bear in mind that the expenses that incur from your company need to be a genuine business cost and they must not be extra or excessive. Now, you might be wondering whether is it worth spending on client entertainment. It’s up to you and may vary based on your business’s nature and the clients you want to build up. Although the entertainment cost of the business is not favourable when it comes to taxes and VAT, however, you can establish good relations with your business associates and win new contracts for your business. Therefore, we can conclude that the initial investment needed to win projects is worth your time and money. Entertaining Overseas Clients/Customers You can reclaim the VAT incurred on the entertainment cost of the overseas customers/clients carried out at a reasonable scale, which is done only for business purposes. As per HMRC, an overseas customer is someone who’s not an ordinary resident of the UK or performing its business activities in the UK ( including the Isle of Man). However, there’d be an output tax if there’s a personal benefit to the overseas customer by the entertainment. In this way, it will cancel out any recoverable input tax. In most cases, the private or personal benefit is linked with business entertainment. But if the expenses are strictly for business purposes, the private benefit can be ignored. Need Help…! Knowing whether the client entertainment is tax-deductible can be complicated as there are many factors involved. However, as a general rule of law, it is not tax-deductible as it is not wholly and exclusively done for business purposes. On the other hand, you can reclaim VAT on the expenses incurred on the entertainment cost of employees or overseas customers, provided they’re only for business purposes. For detailed information about business entertainment, you can visit the HMRC website. Whether you’re a startup or an established business, CruseBurke is here to grow your business beyond numbers. So, contact our qualified accountants to sort out your issues! Get an instant quote right away! Disclaimer: This blog post provides general information on the above topic.

How Long Does a Tax Investigation Take? Everything you Need to Know!

George20/08/2021Personal Tax , Tax Issues , VAT

HMRC tax investigation can be a dreadful prospect, especially for the one who has never been through this phase. In the worst-case scenarios, the investigation can take longer duration than normal and its consequences can be stressful. But fortunately, it is rare. The fear of HMRC investigation is natural and understandable. However, this process shouldn’t be that onerous if you’re efficiently handling your accounts. So in today’s blog, we’ll have a look at what is a tax investigation? What are the reasons for tax investigation? What’s its procedure and how long does a tax investigation take? Let’s start! It is advisable to get the help of a tax expert to avoid a Tax Investigation. Get in touch with us now! What is a Tax Investigation? HMRC performs a tax investigation to inspect the business’s finances to ensure that it is paying its due taxes, both current and of the past. You’re legally required to cooperate with the HMRC tax investigation team and it doesn’t imply that you have made something wrong. If you’re handling your finances with proper care and you’re having a qualified accountant, a tax investigation will not be that daunting and time-consuming. Reasons for a Tax Investigation HMRC may investigate the finances of your business for a number of reasons. Taxes can be complex and there are chances of mistakes. But you don’t need to worry if you have made an honest mistake. Here are a few of the common reasons that cause a tax investigation: Your business seems a high risk for HMRC There’re omission, mistake or unusual activity in your accounts There are noticeable inconsistencies between your tax returns like there is a large fall in income Your business is frequently filing tax returns late Your business is the target area of HMRC HMRC is suspecting your business You are having an offshore bank account Your costs are above the industry norms You’re getting income from property HMRC gets a tip-off What are the Taxes that HMRC Investigates? Many people believe that a tax investigation is just about investigating the income tax. But it’s not true. Typically, these are the taxes HMRC can investigate: VAT Capital Gains Tax Corporation Tax Construction Industry Scheme (CIS) Climate change levy Insurance premium tax Landfill tax Insurance premium tax IR35 On the lookout for Tax expert? Reach out to us today for affordable accounting services in Croydon! We provide a wide range of accounting and taxation services to small and medium-sized businesses across the UK! Procedure of a Tax Investigation So, how you’d be aware of a possible tax investigation? Before an investigation, you’ll get a notification from HMRC about the investigation and it may ask you to provide basic information as evidence to support your stance. The data they may ask will depend on the type of investigation they’re performing. You need to provide all the documents to HMRC on time, within 30 to 35 days. Failing to provide the records and data can lead to hefty penalties. The investigation can uncover all the claims and errors. Afterwards, you’ll receive a letter about the outcome of the tax investigation and the due amount you owe to HMRC. The results may not be correct always. So it’s better to consult a tax accountant before accepting the results. How Long Does a Tax Investigation Take? There is not a standard period for a tax investigation by HMRC. The duration of a tax investigation will depend on the investigation level and the paperwork required. This process can take few months, but sometimes it can extend to more than a year or even longer (for complex business structures). In addition, an investigation can be delayed by HMRC to get more information. It is not possible to predict the time limit of an investigation, but you can minimise its length. Cooperating with HMRC and providing the documents on time can speed up the investigation process. This process can take a long time if HMRC finds something new or hidden. HMRC might ask you to provide 20 years of records in case of underpayment of taxes. Usually, an Aspect investigation (where a single aspect of a return is inspected) takes up to 3 to 6 months. On the other hand, a Full Enquiry investigation can stretch to a year and more if the case is complex. And the more time it takes, the more costly it becomes. Quick Sum Up After discussing how long does a tax investigation take, you might be wondering how to avoid a tax investigation or make it less severe. In this instance, you need to maintain and keep all the records in order from the start of your business till now. The more tax records you have, the better. Bear in mind that if you receive a notice for a tax investigation by HMRC, the tidy and up-to-date financial records will help you to avoid problems during the process. Moreover, it will speed up the process of a tax investigation. A tax specialist can assist you better with what to do when you face a tax investigation. CruseBurke offers professional services to avoid or minimise the consequences of a tax investigation. Our accountants and tax experts will resolve any problem in your accounts before they turn into big issues that can lead to a Tax Investigation. Have a query? Contact us today, we’d love to help out! Disclaimer: This blog provides general information on the above topic.

Who Needs to Complete a Self Assessment Tax Return?

George13/08/2021Personal Tax , Tax Issues , VAT

Find out what self-assessment is, who needs to complete a self-assessment tax return, when to submit one and what penalties you need to pay for late payments. Let’s delve into the details. There are over 12.1 million people in the UK who need to fill out and submit a self-assessment tax return to HMRC. The deadline to submit a self-assessment tax return online and pay the previous tax bill is 31st January. For the paper tax return, it is 31st October 2025. If you want to register for self-assessment as a self-employed/sole trader, not self-employed and a partner or partnership, you can register on 5 October 2025. A large number of our clients face problems while registering for self-assessment. Therefore, to make things easy, CruseBurke is offering self-assessment registration services for you to avoid stress and fuss. So what are waiting for click here to register today! What is Self Assessment Tax Return? Self-assessment is a system employed by HMRC to work out the tax on your income. Generally, the tax is deducted from your wages, pensions, and savings via PAYE (Pay As You Earn). But if you or your business is getting any income from another source, you need to report it to HMRC by sending a self-assessment tax return. Who Needs to Complete a Self-Assessment Tax Return? You need to complete a self-assessment tax return to HMRC annually to pay income tax and National Insurance (NI) against your earnings/profit. The tax return needs to be submitted if you: are a limited company director or a business partner are an employee/pensioner with annual earnings of £100,000 or more want to claim tax relief on pension contributions (higher or additional rate taxpayer) have earned £10,000 or over from investment income or savings interest need to pay capital gains tax from selling assets at a profit want to claim child benefit, if your income or the income of your partner is above £50,000 are the trustee of a registered pension scheme or of someone who has died If you receive a P800 notice from HMRC showing you underpaid tax, and you’re not repaying it through PAYE, you may need to file a tax return. are a Lloyd’s underwriter are a religious minister Remember that sometimes you need to pay taxes and NI via PAYE and need to complete your self-assessment. For instance, if you receive an investment income and operate a part-time business along with your employment. Furthermore, limited companies need to file their company’s tax return along with the tax return on personal income. CruseBurke offers financial and tax consultant services for contractors, self-employed individuals, and limited companies to stay on top of their finances. Work with our tax consultants today to address your tax returns! Contact now! When will HMRC Send you a Tax Return? Usually, HMRC will send a return to you if: you have earned income without paying tax on it (like income from investment, land, property or overseas) you’re a pensioner getting old age relief, though you need to send a short return with fewer details your capital gains have exceeded the annual exempt amount (£3,000) you were required to fill in a tax return last year Bear in mind that if you’re already aware of the tax you need to pay, you shouldn’t wait for HMRC to contact you. As it is your responsibility to declare your taxable income. After receiving a tax return from HMRC, you are legally bound to complete and submit it via post or online. On missing the deadline, you need to pay penalties and may also pay interest on the surcharges on any tax you that you need to pay. The deadline for sending tax returns via post is 31st October and online submission is 31st January. Penalties for Late Payments You need to prepare your tax returns before the deadline to avoid errors in the hassle of sending the returns late. You’d be liable to pay interest on unpaid tax and penalties. The standard penalties for sending tax returns late are as follows: Quick Sum Up Hopefully, now you know what is a self-assessment tax return, when to pay it to them, who needs to complete a self-assessment tax return, and the penalties for filing it late. Moreover, if your circumstances change like you receive new income from investments or shares, you need to inform HMRC about the changes. As it will affect your tax return. If you want to avoid paying hefty penalties, feel free to contact our certified accountants for accuracy and efficacy during the process of sending self-assessment tax returns! Disclaimer: This blog is written for general information on the self-assessment tax return.

Property Tax UK: Brief Guide to Buying Residential Property in the UK

George11/08/2021Landlord , Personal Tax , Tax Issues , VAT

Taxes are always unexciting. However, if you want to buy or sell a property in the UK, you need to know the ins and outs of property taxes in the UK. So let’s delve deep into it. Currently, the UK government is focusing more on imposing taxes on residential property. In this instance, certain changes have been made that have added more complexity to the property tax system. In addition, the UK property market has also attracted a large number of foreign buyers to invest in residential properties. So, if you are pondering to buy a property in the UK, you need to take expert advice from our tax accountant before making a final decision. In this blog, we’ll have a look at some of the main property taxes in the UK. Let’s kick off with Stamp Duty Land Tax (SDLT)! Want to buy or sell a UK property, get bespoke tax advice beforehand from our experts to be on the safe side. Contact us right away! Stamp Duty Land Tax (SDLT) Whenever you buy a residential property in the UK, you need to pay SDLT. The rate of tax depends on the worth and nature of the property. There are various tax rates depending on the different tax bands of the value of the property. Here is the table to show the SDLT rates from 1st July to 30th September 2021 as per your property value: However, these rates vary onward from 1st October 2021 In case of buying your first home from 1st July 2021 onward. You are exempted from SDLT up to the purchase of £300,000. In addition, you need to pay 5% if it is from £300,001 to £500,000. You need to pay an additional 3% if you buy a new or additional residential property. If you’re a non-UK resident (not present in the UK for 6 months) you need to pay a 2% surcharge on purchasing a residential property in England/ Northern Ireland. There are many reliefs and exemptions available as per your circumstances. Get in touch with our accountants to mitigate SDLT! Inheritance Tax (IHT) When it comes to property tax in the UK, you can’t overlook inheritance tax. The beneficiaries of the deceased person need to pay 40% of the IHT if the value of the estate is above the nil rate band £325,000. There are many ways to mitigate IHT by transferring the properties to direct heirs like a spouse or civil partner. In addition, you can also provide gifts to your children, donate assets to charities and put the assets into a trust to reduce or avoid IHT. These techniques seem appealing, however, there are severe tax consequences. Therefore, taking advice on inheritance tax is beneficial to avoid paying extra taxes. Capital Gains Tax (CGT) Along with SDLT and IHT, Capital Gains Tax is a tax payable on the increased value of the property at the time of disposal or selling. If a property is not your main home (like buy to let properties, business premises, inherited property or land) and you make a gain by selling or disposing of, you need to pay 28% Capital gains Tax. Sometimes this rate may vary. It should be payable within 30 days of disposal. Although gifts are exempted from CGT, but you need to remember that gifts can have a wide range of tax consequences. So it is a better practice to take expert advice before making a gift. Worried about the Capital Gains Tax and ATED, let our accountant handle it! Annual Tax on Enveloped Dwellings (ATED) ATED is paid mainly by companies owning a residential property above £500,000. This amount is charged as per different bands based on the property’s value. Here is the table that shows the annual charges of the property value from 1st April to 21st March 2022: Property value Annual charge £500,000 to £1 million £3,700 £1 million to £2 million £7,500 £2 million to £5 million £25,300 £5 million to £10 million £59,100 £10 million up to £20 million £118,600 Over £20 million £237,400 These rates increase on annual basis as per the inflation. You can claim reliefs on these in an ATED return. Income Tax If you’re buying a residential property for the purposes of letting, you need to pay income tax on the rent received by the tenant. The rate of income tax starts from 0% to 45% as per the amount of rental yield. The deadline to file a UK tax return is at the end of the tax year (6 April – 5 April) landlords (non-residential) need to submit a UK tax return to show their rental yield, and pay any income tax (by the following 31 January). Succession Planning If a deceased person has not left a will before dying, the government will distribute the estate under UK intestacy law. This law may not be favourable for you when it comes to taxes. Therefore, it is advisable to prepare a will while purchasing a property in the UK. By doing this, it will provide certainty for passing wealth to the person who’s mentioned in the will and it will ensure the tax position of your estate at the time of death. Quick Sum Up Hopefully, this blog has helped you to know the basic details of property tax in the UK. So while buying, selling, transferring or inheriting property in the UK, you need to consider the property taxes like SDLT, CGT, IHT, ATED and income tax. Bear in mind that these taxes vary based on various factors and keep on changing from time to time. Furthermore, the rates are not the same for all. These are different for residential and commercial landlords and for the native and non-natives. In addition, there are many allowances and exemptions available to avoid or mitigate the property taxes of the UK. So taking advice from a tax expert is recommended for detailed tax and …

Reclaiming VAT on Fuel & Petrol: How It Works

George04/08/2021VAT

This is one of the most frequently asked questions that we hear time and time again: what is the process of reclaiming VAT on the fuel? Many of our customers are looking for answers regarding VAT on mileage claims. Though reclaiming VAT on fuel is a burdensome process, as you need proper evidence to prove that you have used the fuel for business mileage. Additionally, you are also required to follow the standards of HMRC to reclaim VAT on fuel and petrol. So, let’s talk about the ways to reclaim VAT on fuel and petrol! Need a VAT Accountant to Reclaim VAT on Fuel, Contact CruseBurke! Ways to Reclaim VAT on Fuel In this blog, we have compiled four ways to reclaim VAT on fuel and petrol for business use. These include: 1) Reclaiming 100% VAT on Fuel If you have used fuel or petrol wholly for business purposes, you can claim 100% VAT incurred on it. However, here you need to provide evidence to HMRC that you have used it entirely for your business and you have not used it for private purposes. It might be impossible to prove unless you are a taxi firm or a driving school. 2) Reclaiming 100% and Fuel Scale Charge It is the commonly practised approach by many businesses where the companies provide their employees with a fuel card. With these fuel cards, they can pay for fuel both for personal and business use. It is the simplified way of levying tax on the fuel that is used for private purposes. By paying for a fuel scale charge, you can claim VAT used for business purposes. This charge depends on C02 emissions and the type of car driven. However, you need to keep in mind that if the business mileage is not up to a certain standard or low, it can be difficult to claim back VAT on it. HMRC auditors can easily identify and check the finance team on VAT reclaim by employing this method. As in many cases, the companies forget to pay/update it when the fuel scale charge changes. Boost your savings with our bookkeepers and accountants. Find out how we can reduce your tax burden! 3) Claiming Only Business Mileage Another option to claim 100% of business mileage is to claim VAT incurred on the fuel used for business mileage. This implies that you need to keep a proper record of where you have travelled and you also need to have VAT receipts to support your claim. This can be a complex task, therefore you can go for a flat rate claim (advisory fuel rate) for business mileage consumed and reclaim VAT on this amount. 4) Don’t Want to Reclaim VAT Some businesses prefer not to claim any VAT on business fuel and they cover its cost personally. Generally, it is done if the business mileage is too low and the amount that is going to be claimed is too small. Some people also avoid claiming VAT as it requires proper bookkeeping and recording. Quick Wrap Up To sum up, hopefully, you have got enough information on reclaiming VAT on fuel and petrol. Remember that you can claim the VAT (that is not claimed) used for business up to the last four years. HMRC may ask you to provide evidence like receipts, to support and prove your VAT reclaims. If you are consuming a lot of mileage for business purposes, reclaiming VAT on fuel can save a lot of your money. However, you need to remember that if you make a mistake, it is going to cost you instead. So, it is preferable to take the services of a qualified accountant to keep on top of your finances. For further queries on claiming back VAT on fuel, reach out to our accountants for expert advice. Get in touch today! Disclaimer: This blog provides general information on claiming back VAT on fuel.

The UK Value Added Tax Rate (VAT) Explained

George12/05/2021VAT

Value-added tax (VAT) is levied on goods and services in the UK. It is a type of consumption tax, as it is levied on the items and services that people use in their daily lives. It is an indirect tax that government collects by businesses. In this blog, we’re going to discuss the UK value added tax rate. Remove your VAT troubles with CruseBurke! Value Added Tax Rate: On most purchases, the standard UK value added tax rate is 20%. However, there’re also other tax rates including a 5% reduced rate on energy-saving measures, children’s car seats and sanitary products. The zero rates are applied on most books, newspapers, foods and children’s clothes. You don’t need to pay VAT on these items. But you have to record and report it to your VAT returns. Some items are exempted from VAT, like financial or property transactions and postal stamps. According to EU law, the standard rates of VAT in EU states ought to be 15% or more. Key Takeaway: After Income Tax and National Insurance contributions, VAT is the third biggest source of revenue for the UK government. Get connected with our VAT Accountants! Who’s Liable to Pay VAT? If your business has annual revenue above £85,000, you are obliged to register to pay and charge VAT on the products and services you buy or sell. In case you are earning below this threshold, you can voluntarily register and pay VAT. Businesses charge VAT from the customers and then pay it to HMRC while filing their VAT returns. How can You Pay VAT? HMRC accepts the VAT payment in various ways, the payment can be made on the same day or the next day: By Fast-payments via phone or online Through CHAPS using an online form Along with the above ones, there are multiple payment options that will approximately take 3 to 5 working days to pay VAT: Direct debit At a bank or building society BACS Debit or credit card Standing order (for some VAT schemes) Visit the government website to know how to pay your VAT bill Or ask us to do it. How to Charge VAT? You need to charge VAT along with the products and services you sell to your customers. You should add it to the amount you charge for product or services. You need to do it properly so that you’ll file accurate VAT returns and pay the money that you owe to HMRC. The invoices need to have: The invoice number and date The details of your business including name, address etc The VAT registration number The customer’s details A description of the goods and services covered You should clearly write the details of each in your invoice including: Unit price without adding VAT Quantity or weight VAT rate The total amount without paying VAT The VAT amount to pay Cash discount if any Need Help with VAT: Now, you have got enough information about the value-added tax rate. If you’re looking for expert assistance, CruseBurke has a team of certified VAT accountants for your help. Feel free to leave your query here, we’ll get back to you soon. Disclaimer: This blog provides general information on VAT.